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China’s proposed National Financial Regulatory Commission will better tackle lingering issues that threaten to destabilise the economy, ranging from a housing bubble to the unbridled expansion of financial conglomerates, said Goldman Sachs in a research note.
The new regulator, which will combine the power of the China Banking and Insurance Regulatory Commission (CBIRC) and part of the PBOC oversight duties, will level up regulatory requirements and integrate oversight of conglomerates such as Ant Group and Citic Group, Goldman said.
“We see the proposals as a ‘consolidation’ of financial regulations to strengthen institutional supervision, the supervision of behaviours and the supervision of functions,” the bank said. “We expect more measures on liquidity and capital to prevent regulatory arbitrage [by] these financial conglomerates.”